Public Bill Committee

[Mr Edward Leigh in the Chair]
Written evidence to be reported to the House
FS 13 City of London

Clause 79  - Arrangements for the investigation of complaints

Question proposed, That the clause stand part of the Bill.

Christopher Leslie: Good morning, Mr Leigh. May I say what a pity it is to have reached so soon the concluding sitting of this Committee on the Financial Services Bill? I feel as though we were just getting started and warming up to the themes involved in the Bill.

Edward Leigh: We would all like to listen for another 40 hours.

Christopher Leslie: I do not know whether it might be possible for the Government to consider taking a fresh look at the programme motion and to set aside some more sittings, because I am not sure that the Bill has been scrutinised sufficiently. [Hon. Members: “Hear, hear.”] I am glad that there is some support from all parties for such consideration. Perhaps the usual channels can discuss that possibility.
The clause takes us to part 6 of the Bill relating to the investigation of complaints against regulators. It establishes arrangements that the regulator must take to ensure that there is a proper complaints scheme for the investigation of complaints in connection with the exercise or failure to exercise any of the non-legislative functions of the Prudential Regulation Authority or the Financial Conduct Authority.
We shall discuss under later clauses what is or what is not a legislative function of the regulators, but it is important to bear in mind the arrangements as they currently exist because the Financial Services and Markets Act 2000, the legislation under which the regulatory arrangements were established, had within it a general provision—not massively dissimilar to the clause—whereby arrangements need to be made for the investigation of complaints. Under secondary legislation, the Financial Services Authority subsequently via orders tabled by Ministers created the quango, the Office of the Complaints Commissioner. It was introduced with effect from 3 September 2001, and it is a process that has obviously been going for more than a decade.
In the first instance, complaints from affected parties who might consider that there was failure of the regulators or a breach of their duties have to be made to the regulators themselves. The FSA was the recipient of the initial complaints and had the opportunity to look into them, and that is the usual practice in respect of public bodies. However, if there were a sense in which the complainants do not consider that the complaint had been thoroughly or adequately investigated, they have the option to pass it on for investigation by the Office of the Complaints Commissioner.
The commissioner does not consider the complaints in isolation, but looks at the issues under what is known as a complaints scheme, which is a set of principles and rules that govern the processology of how a complaint is pursued and the issues within it. We are often asked about how constituents can complain to public bodies and, from time to time, we find that there are serious breaches of duty by public bodies and, as Members of Parliament, we can write to those bodies and let them know our views, having made an initial appraisal of the case. On other occasions we make those complaints through the parliamentary ombudsman system, and I have some specific questions on how that overlaps with the Office of the Complaints Commissioner and the new complaints procedures in clause 79.
Now and then, there are vexatious or frivolous complaints. It is a pity, but sometimes individuals are simply dissatisfied with a decision and have a grievance about its outcome. They may decide to lodge a complaint about an administrative or process failing rather than lodge their views against the decision. I presume that the Office of the Complaints Commissioner in the complaints scheme has managed to set up systems to filter vexatious, frivolous complaints from genuine ones. The Bill does not set out precisely how such a system will be framed in relation to the new complaints scheme and arrangements.
Currently, the commissioner can consider complaints about how the FSA has carried out or failed to carry out its role under FSMA. However, complaints about the predecessor bodies covered by previous legislation are considered under the transitional scheme. That is important, because when FSMA was introduced, the transitional scheme was set up to ensure that complaints that had been launched under the old regime did not fall through the gap and that there would be opportunities to pick up on issues that arose from them. We have a series of questions about how complaints will be picked up in relation to the new scheme, because the system might become more complex.
At present, the commissioner does not generally investigate complaints unless the FSA has had an opportunity to do so, but he can investigate before that in exceptional circumstances. Will the Minister tell us what those exceptional circumstances are and whether the same approach will be taken in the new complaints process? The complaints commissioner currently investigates the complaint and issues a preliminary report to both the complainant and the FSA, which may then make further submissions. On receipt of such submissions, the commissioner issues the final analysis and publishes it in an anonymised format and, I am glad to say, on a website, which is accessible to many people.
Complainants who complain to the complaints commissioner must be mindful that particular complaints are excluded from the complaints scheme, and that complaints payments are expressly unavailable for complaints investigated under the transitional scheme. That is important, because we will discuss provisions later in the Bill relating to how compensatory payments are made. In the transition to FSMA, compensatory payments were not made. Presumably there will be arrangements to capture complaints in the transition to the new arrangements, so that they do not fall through the gap between the existing and the new system. I hope that appropriate compensatory payments will not be nullified and made invalid, as appears to have been happened in the old transitional scheme. Individuals whose complaints processes are being explored now need to know what the situation will be.
It is vital that the new regulators can respond to complaints about their conduct, not only to ensure that they are held to account for wrongdoing or malpractice, but to ensure that there is direct public accountability. We welcome the Minister’s concession in response to the pre-legislative scrutiny report. In paragraph 341, concerns were expressed about the initial draft of the Bill, which had at first set out the possibility that the FCA investigator would be required to be independent and would have to have their appointment approved by the Treasury, as is the case with the Office of the Complaints Commissioner at present. Under the original draft of the Bill, the PRA was not required to have an appointment from outside the Bank of England—obviously, because it is subsumed within the Bank—or an appointment approved by the Treasury, and the Government took that into account. As a consequence, they agreed to give the PRA and the FCA the same structure for complaints, and that is a welcome change.
The pre-legislative scrutiny process is important. Given that this is our last sitting, Mr Leigh, and we do not have members of the pre-legislative scrutiny Committee here, I want to pay tribute to the members of that Committee. I thank them for their hard work and diligence in making recommendations. This is an example of one way in which their work has been adopted in the Bill. It is to their credit that they made this particular suggestion.
Clause 79 provides for an independent scheme in which regulators, including the PRA, appoint an independent investigator. That is to be welcomed. It is right that the investigator is approved or can be dismissed by the Treasury. I have asked the Minister questions about the transition of existing arrangements. On the new arrangements, why have the Government decided to leave details of the establishment of the complaints arrangements to the regulators rather than specifying in a little more detail, perhaps in a schedule to the Bill or a schedule to clause 79, specific ways in which the complaints scheme might work? They seem to have delegated a considerable amount to the regulators themselves. Perhaps it was a failing of the FSMA legislation in 2000. If we are going to prove to outside parties that a particular scheme or complaints arrangement is genuinely independent and free from prejudice or bias, it is normally preferable that the complaints processes are free-standing and have a degree of separation from the body to which the complaints are being lodged. My concern is that allowing the regulators to construct their own complaints arrangements may give rise to a perception—not necessarily true—that the complaints arrangements have been biased in favour of the regulator as opposed to the complainant. That is a concern that some people might have.

Mark Durkan: Clause 79(1)(a) states that the regulators must
“make arrangements…for the investigation of complaints arising in connection with the exercise of, or failure to exercise, any of their relevant functions”.
The relevant functions are defined in clause 80, and legislative functions are excluded. The clause 80 definition seems to mean that everything in part 6 is a function of the regulator for the purposes of part 6. Further to my hon. Friend’s point, does that not give rise to the danger of a lot of complaints being about the complaint function itself?

Christopher Leslie: My hon. Friend might have spotted an anomaly, which perhaps the drafting process did not actually exclude. There has been a lot of cutting and pasting in the FSMA arrangements. Members of Parliament will be aware of the fact that complaints, particularly vexatious complaints, can arise on any number of small and minor matters of procedure, so it might not simply be the non-legislative actions of the FSA or the PRA that give rise to complaints. It might be the actual complaints process itself. Will the Minister address this point? Why does the Bill not exclude the establishment of the complaints process architecture itself, as well as the legislative functions of those particular regulators, outwith the scope of the complaints processes? That is the kernel of my hon. Friend’s question.
What exactly is envisaged? Part 6 contains only paving arrangements about the complaints process and the complaints commissioner. Should we assume that the Office of the Complaints Commissioner will continue? Will two separate offices be established under the auspices of that one organisation? Will they be entirely independent, or will services be shared and line management arrangements pooled so that the accountability is to that single office?
I am not familiar with the details of how that office works. Will the Minister say whether the independent investigators are standing post-holders with permanent positions? Will their appointment be like that of the Parliamentary and Health Service Ombudsman, in that individuals will serve for four or five years? Will their particular duties mean that their tenure continues for a significant period? Are we talking about a person who is a Crown appointment, or about a generic office with an individual who appoints other investigators? What is the current cost of the Office of the Complaints Commissioner? I presume it is currently co-located with the FSA, but will the Minister give us a notion of the scale of that office?
We need to ensure that the office will have an impression of independence in being at arm’s length from the regulators. Will the appointment process involve external individuals to give us the confidence that an investigator is not a friend or a mate of key senior individuals in the regulators, but is genuinely a full and open appointment, chosen on merit and with the external reputation of being free from any perception of bias towards them? Although the two regulators have different and obviously important roles, both will need open and transparent means of receiving complaints.
It is correct that the Treasury should have responsibility over the appointment and dismissal of independent investigators, and it is important that those investigators are guaranteed to be independent. In its written evidence to the pre-legislative scrutiny Committee, the Office of the Complaints Commissioner pointed out that such independence was particularly necessary, because in certain circumstances the Bank of England and some of its staff have legal immunity for issues such as negligence.
Is the Minister able to draw a parallel between the civil service and Bank of England staff in relation to any additional legal protections or immunities from legal proceedings arising from maladministration or misconduct? The complaints process obviously abuts questions relating to legal recourse for failings occurring through maladministration of public office. Will he say whether there are such additional legal immunities in the Bank of England, and therefore in the PRA, that will not be available to those exercising their duties in the FCA, or will the FCA have similar immunities to those of the Bank of England? On the approval process for investigators, will there be an approval panel to ensure that they are independent, because that is important?
Regarding the system of complaints in clause 79(3), the Committee will see that the
“complaints scheme must be designed so that, as far as reasonably practicable, complaints are investigated quickly”.
Under what conditions would it not be “reasonably practicable” to investigate a complaint quickly? The phrase in the clause is a generic one, relating to the operation of the complaints arrangement. I do not know whether a particular standard or target has been set by the existing Office of the Complaints Commissioner for the speedy conclusion of complaints processes. Do the new regulators envisage a particular target for their complaints schemes?
My notes tell me that the FSA currently completes 60% of cases within eight weeks, but sometimes complaints can take up to 16 weeks to deal with; I think those figures were in the 2011 FSA report on complaints. Does the Minister envisage the new complaints arrangements to go further and improve on the standards set by the existing Office of the Complaints Commissioner? Can he reassure us that the performance of the new arrangements will compare favourably to the existing arrangements?
Will there be a monitoring process for the new complaints arrangements envisaged? For example, will the regulator have a relationship with the new complaints investigator to ask about the extent to which complaints are processed, or will there be an entirely hands-off relationship? Will there be an internal monitoring process for the complaints arrangements?
Conversely, will Her Majesty’s Treasury, which obviously will be involved in the arrangements, monitor the new Office of the Complaints Commissioner, or whatever we are going to call the new complaints systems for the regulators—[Interruption.] That might be the Office of the Complaints Commissioner ringing with that particular answer. [Laughter.]

Edward Leigh: Order. Can we all calm down? It says a lot that even a mobile phone ringing sets us all into hilarity. Let us concentrate.

Christopher Leslie: It is strange that such things can have such an effect.
I want to know about the external oversight of the complaints process. As a corollary of that, it is important to know whether Parliament will have an opportunity to scrutinise properly the performance of the two new investigators. If the Treasury is to have some oversight, I presume that there will be some sort of parliamentary scrutiny of the new arrangements. Will the Minister clarify the level of accountability?
Would the Minister say a little more about the current and envisaged levels of resourcing of the two new regulators? Many people will assume that having two complaints regulators as opposed to one will cost twice as much, which will be a concern for those who fund the system. I assume that levy payers—financial services practitioners themselves—will make the contributions towards the arrangements, so some transparency about the level of resourcing of the new regulators would be helpful. Is it a demand-led budget that expands regardless of the number of complaints lodged or does he envisage a cap on the expenditure of the two new regulatory investigators?
Similarly, as I asked on previous clauses, does the Minister have an estimate of the savings that might accrue from the changes to the regulatory architecture? After all, we are setting out the new regulatory scheme that is supposed to capture and prevent failures of conduct and regulated persons, so I assume that the downstream consequences are that we can anticipate fewer complaints going to the new commission, just as there may be fewer complaints to the ombudsman.

Yvonne Fovargue: Does my hon. Friend agree that the costing of the complaints is extremely important, because the levy will also have to fund debt advice? Any increase in complaints costs will mean less money to fund the debt advice.

Christopher Leslie: I do not know whether that is the case—it might be that this is a very minor part of the total cost facing the levy payers—but I think that my hon. Friend’s point is valid. We need to ensure that we have an efficient complaints process that does not balloon to the extent that it crowds out possible resources for those other more proactive priorities. I would be grateful if the Minister commented on the costs involved in the arrangement.

Mark Durkan: There are actually three regulators under the clause that will have to appoint investigators for these purposes, but does the Bill preclude two or more of those regulators appointing the same person?

Christopher Leslie: That is what we do not know, and we will have to see if the Minister can elaborate on that. The PRA, FCA and the Bank may or may not have decided how they will proceed on such issues. It would be helpful if the Minister addressed that point.
I was coming to the issue that I alluded to earlier on the transition between the existing scheme under FSMA—the Office of the Complaints Commissioner—and the two or three new arrangements, and how complaints against the predecessor bodies will be handled. The Minister will accept that that is an important question. The volume of complaints to the FSA is obviously monitored, and I assume that he can give us an insight into whether there are dozens or hundreds of complaints currently extant against the FSA. When the FSA and the OCC arrangement finishes and the new arrangements are set up, how will complaints be handled if they are complaints against the FSA? Which regulator will pick up those loose ends? Has a proper process been put in place to determine the most appropriate regulator?
With different complaints arrangements, it is important to think about how to get a degree of feedback among the players. The Bill creates a tremendous extra layer of complexity to regulation, and seems to create the same thing for complaints as well. I want to ask the Minister about the feedback processes. In the first stage, complaints currently go to the complaints team at the FSA, which determines whether they are valid and investigates, but in the second stage, if the complainant remains dissatisfied, complaints are investigated by the complaints commissioner. Will there continue to be a two-stage process for the investigation of complaints in that way? How does the Minister envisage that that will work if there are three regulators and three complaints teams? Will there be some sort of triage or gateway? If an individual said to the PRA, “I think that you have been remiss in this”, would it be for the PRA to pass on complaints to the commissioner overseeing complaints about the FCA, or will the PRA simply pass the complaints to the FCA operationally? When will the complaints be routed elsewhere?
Will the complaints scheme also ensure that there is an adequate feedback route—a loop—to ensure that all the regulators properly learn lessons of failures that might also be visible and have parallels in other regulators? One can imagine a situation where a complaint is put in about a particular process within the PRA, perhaps in respect of with-profits policy regulation, for which it will obviously continue to have responsibility. Adjudication may then come from its regulatory investigator and one would hope that the conclusions of that adjudication would be accepted and internalised by the PRA. With a separate system, however, is there not a danger that the lessons learned might not be captured by the FCA in that particular instance? To what extent will lessons learned from failures and complaints read across so that they are also learned by the regulators in parallel? That is an anxiety we have about the separation of arrangements.
Conversely, how can we avoid duplication and inefficiency in the complaints processes? If there are generic complaints about regulatory systems, because there are occasions when the PRA can overrule the FCA, or if there are issues that cut across both regulators, or if an individual has a complaint that relates to both regulators—or all three, including the Bank of England—does that complaint have to be divided into three different parts and investigated separately by each? Will there be arrangements to ensure that the complaint can be investigated in harmony? That perhaps relates to the involvement of the Office of the Complaints Commissioner, which has a structure with a degree of co-ordination. I would be grateful if the Minister clarified that situation.
I mentioned that I would ask the Minister about maladministration generally and it is important that we get a sense from him of where the FCA, the PRA and the Bank of England stand as public bodies. Will they be subject to complaints via the parliamentary ombudsman? In other words, will we, as Members of Parliament, see our constituents asking us to approve complaints that could then go on to the parliamentary ombudsman? If that is not the case, it would be helpful for the Committee to know that the new complaints commissioners will have a dialogue with the parliamentary ombudsman to ensure that they can capture all those issues.
Finally, I want to ask the Minister about the justiciability of complaints. I assume that the same arrangements apply where legal proceedings commence against a regulator as might apply in other public bodies where complaints exist and can be made through an existing complaints process. For example, if a complaint is made against a health trust, my understanding is that such complaints are suspended if legal proceedings begin, because of the primacy of the courts. Will the Minister say whether that is the case with these complaints arrangements as well and whether there are provisions for the suspension of complaints processes if legal proceedings begin? Are there the normal possibilities for judicial review of any of the decisions made by the FCA, the PRA or the Bank of England? As you well know, Mr Leigh, a great deal of case law rests around the Wednesbury principles of reasonableness on the administration of public bodies. I want to get a sense from the Minister of the prospects of judicial review. Have we had many occasions of judicial review of the FSA in recent years? If so, were there any lessons or precedents that are pertinent to the new complaints processes?
Those are my few comments on clause 79. I would be grateful if the Minister would answer my questions.

Mark Durkan: As I indicated in an intervention, there is a question over whether complaints can be made to the regulator, and passed to the investigator, about the complaints function detailed in part 6. Many of us know from our constituency surgery experience that people’s grievances are often about the handling or interpretation of complaints or related issues. Different regulators may appoint either different investigators or a common investigator—as I understand it, the Bill does not preclude different regulators from appointing the same person as investigator—so the line call that is made about which regulator the complaint is against might cause problems. Arguably, under the current system, the complaint found its way, in the judgment of the FSA or the complaints office, to where it needed to go. There may be issues about who exactly the complaint is against.
Will the Minister assure us that whatever the outcome is, it will pass the constituency surgery test, namely that when someone comes in with what they think might be a complaint, we and our constituency office staff will know which regulator and which investigating officer we should direct them to? If the outcome does not pass the constituency surgery test, we as legislators will have failed, because we will have produced something that we do not understand, and that our staff cannot understand and give guidance on. We need to apply such a test to the overall outcome of a complaints procedure, because it is likely to flow back to us, as MPs and as legislators. People will say, “When you put this system in place, did you not know?” There is no point in us, as legislators, in a year or two’s time, washing our hands and saying, “Yes, it is a complicated system and we did not really understand it.” Not all those details can be ironed out in time for the Bill, but will the Minister give us an assurance that the overall outcome will pass the constituency surgery test?
Clause 79 relates to other areas of part 6, so I will dispose of some of the related issues now. The functions about which complaints can be made do not include the regulators’ legislative functions, which include the power to issue directions and the power to issue guidance. Complaints may well arise, however, about issues that were subject to misinterpretation because of a lack of guidance or imprecise guidance, and on investigating a complaint the investigators might find that the best way of avoiding the problem in future would be to alter the guidance that is issued by a regulator. Will the Minister assure us that the exclusion of legislative functions from the complaints procedure will not prevent recommendations about the legislative function from being made as part of the remedy or the outcome of a complaint? Would an investigating officer be able to advise a regulator that the extension, improvement or clarification of particular guidance might help? Will the Minister assure us that the limits on the Bill will not preclude an investigator from giving such a sensible recommendation?

Mark Hoban: If the hon. Member for Nottingham East had spent less time padding out his speech and a bit more time reading the documents—

Christopher Leslie: On a point of order, Mr Leigh. I take great exception to that accusation. After such a long time on the Bill, it is unnecessary to have such appalling accusations levelled at me. Do I not have some protection from you in the Chair on this matter? Was I in any way out of order when I made my comments? I asked the Minister a serious set of questions, and I would be grateful for some protection.

Edward Leigh: I think the Minister was simply making a debating point, and I am sure that Mr Leslie was entirely in order. He has got very broad shoulders, so I am sure he can take an insult without worrying too much about it.

Mark Hoban: If the hon. Member for Nottingham East had read this document, he would have read that there is only one complaints commissioner.

Christopher Leslie: What document is that?

Mark Hoban: “A new approach to financial regulation: securing stability, protecting consumers”, published in January 2012 alongside the Bill. On page 64, there is a response to the pre-legislative scrutiny Committee’s recommendation that there should be
“a single complaints commissioner and system covering both the FCA and the PRA”.
In paragraph A.72—[Interruption.] Perhaps the hon. Member for Nottingham East should read it.

Jesse Norman: Will my hon. Friend give way?

Mark Hoban: Let me continue reading the quote, because it will resolve the lengthy concerns of the hon. Member for Nottingham East:
“The Government notes this recommendation and has made appropriate amendments to the Bill.”
Therefore, the answer was here all the time, and that also resolves the concern of the hon. Member for Foyle, who wanted to know whether it would pass the constituency test. It does, and the answer is in the document.

Jesse Norman: Is the Minister really saying that the past 37 minutes have been spent debating an issue that would have been resolved if the shadow Minister had done his homework?

Mark Hoban: That is a fair comment. I would not say all 37 minutes, but a good proportion of that could have been saved.

Mark Durkan: If the Minister is saying that the Government want to legislate to provide a single complaints system, why does the Bill provide for the separate regulators independently to appoint investigators? The Bill provides for that duty to be on them, separately and respectively.

Mark Hoban: I am afraid that the hon. Gentleman has read neither the Bill nor the explanatory notes, because it is clear that we are talking about an investigator, not “investigators”. It is a single scheme. I know that the hon. Member for Nottingham East has been unjustly disparaging of the explanatory notes, but even a casual perusal of them before this morning’s debate would have shown that it is one investigator.
The hon. Gentleman questioned whether complaints could continue with legal proceedings. They can, and in some cases there have been judicial reviews against the FCA; one was held relatively recently on payment protection insurance.
On the speed of investigating complaints, some complaints take time to be resolved, because they may require confirmation of facts or there may be an ongoing FSA or police investigation. There is currently no target for the speed of dealing with complaints. Regulators will consult on the detail of the scheme, and they may wish to consider targets as part of that. In the year ending 31 March 2011, the scheme cost £472,665. That is in the commission’s report, which is in the public domain.
The hon. Member for Makerfield asked whether the cost of the complaints commissioner would squeeze out debt advice. The budget for debt advice is determined by the Money Advice Service, independently of any budget for the complaints commissioner, so her concern is unfounded and I hope that she welcomes that clarification.
There has been a lot of discussion about the appointments process. That process is determined by the regulator, but the legislation clearly requires that the complaints scheme must be independent. As part of that, we expect the appointments process to be open, transparent and based entirely on merit. That is guaranteed by virtue of the fact that clause 79 states:
“The Treasury’s approval is required for the appointment or dismissal of the investigator.”
I note that “investigator” is singular.
On whether the parliamentary ombudsman overlaps with the complaints commissioner, the complaints commissioner will deal with issues of maladministration by the regulators, so there is no overlap. Hon. Members might ask why the parliamentary ombudsman investigated the regulation of Equitable Life, but the reality in that situation was that for the vast bulk of the Equitable Life review period, that company was regulated by the Government, not the independent regulator.
Who decides on vexatious complaints? Determining the process for deciding which complaints are vexatious is for the regulators, in the first instance. As a safeguard, however, the complaints commissioner is informed of all complaints and can make his own decisions, too, so there is transparency in that regard.
The hon. Member for Nottingham East asked about the transition between the old and new complaints scheme. He should remember that the previous transition arrangements reflected a move from a series of self-regulatory organisations to a single regulator, so transitional rules needed to be in place. Of course, the rules for each of those complaints schemes for SROs were different. Complaints made under the existing scheme will continue under the new regime, and arrangements will be set out in the transitional order.

Christopher Leslie: The Office of the Complaints Commissioner gave written evidence to the pre-legislative scrutiny Committee on that question, and, on the transition process, it raised a specific concern about the adequacy of record-keeping practices. The Office of the Complaints Commissioner had already highlighted failings at the FSA, and it raised questions on whether procedures would be put in place to ensure that the new regulators, the PRA and FCA, tighten up and improve their record-keeping capabilities and the integrity of their systems to avoid perceptions of negligence. Will the Minister say what specific steps will be taken to take heed of the recommendations of the Office of the Complaints Commissioner?

Mark Hoban: Currently, that is a matter for the FSA, which should listen carefully to the comments of the complaints commissioner, but it will be taken forward by the PRA and FCA. The PRA and FCA will need to consult on the complaints scheme, and they ought to consider whether improving record-keeping should be part of that.
The hon. Member for Nottingham East suggested that there is not enough detail in the Bill, and he is concerned that the scheme will be biased. I think there is a considerable amount of detail in the Bill, and, of course, there will be a detailed consultation on the details of the scheme itself. We need to remember that the scheme is subject to public consultation and, clearly, if the scheme has deficiencies in the eyes of either consumer bodies or the industry, those comments may be fed back during the consultation. We should be clear that the complaints commissioner is independent. Our role in the appointments process ensures that independence, so the complaints commissioner should not be biased in favour of or against any group. The complaints commissioner should be seen to be, and be in practice, independent.
The hon. Member for Foyle asked whether there might be complaints about the complaints function. Currently, FSMA does not exclude complaints about the complaints scheme, and we are not changing that. A question was raised about the two-stage process, which will continue. Again, I reiterate that the independent investigator will be informed of all complaints and will regularly report on complaints and lessons learned.
It is important that the PRA and FCA include comments on the complaints procedure and on issues identified by the complaints commissioner in their annual reports. Such transparency will help. The annual reports will be laid before Parliament, of course, which will provide an opportunity for Members to raise questions and to have a debate. The Treasury Committee, three distinguished members of which are here today, will also be able to investigate those areas, if necessary.
There was a question about whether the new complaints scheme will be more expensive than the current scheme. Having a single scheme should reassure hon. Members that the costs will be kept under control, but it is important that the complaints scheme is seen to be robust, which will determine some of the costs. I do not think hon. Members would accept a scheme that is run on the cheap but does not give complaints a fair crack of the whip.
The hon. Member for Nottingham East asked about legal immunity for negligence, which I ought to touch on. The FSA and the Bank have statutory immunity in the exercise of their statutory function. That will be the same for the PRA and FCA, unless they act in bad faith. Of course, there is no immunity for claims under the Human Rights Act.

Christopher Leslie: I am interested in that last point. I did not realise that the immunities had changed when the Human Rights Act arrangements came into force. I am grateful to the Minister for clarifying that there will be a single commissioner. He seemed a little exercised about the fact. He was free to intervene on me at any point to clarify that and answer what I hope was a straightforward question. I do not have a phalanx of officials supporting me in scrutinising this Bill. Google is a very useful device from time to time. I can try my best to look at these arrangements but my speaking notes are not written verbatim for me in a beautifully presented red folder. [ Interruption. ] And very skilfully presented too. I am sorry that the Minister felt it necessary to disparage my innocent question about the complaints structures.
I am grateful to the Minister, however, because he helpfully clarified some of my specific questions about whether we might end up with some bias within the system because the regulators are responsible for setting up their own arrangements. I am not sure I am satisfied that it is adequate to have no schedule to the Bill that properly details these arrangements. That would have been far preferable to page 64 of his consultation report. It would have been better to include these arrangements in the Bill. Although it might be more efficient in financial and resourcing terms to avoid duplication, I have some anxieties that a lack of separation of the complaints process might give rise to the sense that insufficient skill or attention will be available to inquire into the particulars of complaints relating directly to the FCA or the PRA. On balance, he has probably concluded that efficiency should outweigh those factors. I can certainly understand the sense in that.
The Minister says that no targets are currently envisaged to deal with the speed and efficiency of the processing of complaints. That is a great pity although it is welcome that he has said that the regulators and the new investigators might wish to consider that as a possibility. It would be very helpful if they did. I assume it will still be called the Office of the Complaints Commissioner. What possible performance targets can be set? Surely the speed and rigour with which they process the complaints they receive is pretty much top of the list. It is right there as the single clear issue that they would want to put on the top of their business plan, so the new regulators will welcome the Minister’s comments.
I am surprised that the current arrangements cost £460,000 or £462,000 a year. I think that was what the Minister said—he gabbled it out so quickly, it was difficult to capture the precise figure. That is a not inconsiderable sum. Presumably that equates to a dozen or so members of staff. I assume that they are fully occupied given the task they have at hand. He was not able to tell us what the costs of the new arrangements would be. I do not know whether the Minister has had a discussion with the regulators about their plans in that regard, but it would have been useful to get a sense of the levels of resourcing that will be taken up thereafter.
The Minister also said that there is not a direct overlap with the parliamentary ombudsman although it is helpful that he explained the rationale behind the involvement of the parliamentary ombudsman when it came to the situation of Equitable Life. That must stand out as one of the most important examples in the past generation of complexity and escalation of a complaints system that—

Debate interrupted (Programme Order, 21 February).

The Chair put forthwith the Question already proposed from the Chair (Standing Order No. 83D), That the clause stand part of the Bill.

The Committee divided: Ayes 10, Noes 7.

Question accordingly agreed to.

Clause 79 ordered to stand part of the Bill.

The Chair then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).

Clause 80  - Relevant functions in relation to complaints scheme

Amendment made: 101, in clause80,page148, line37, leave out ‘312J or 345D of FSMA 2000, or’ and insert ‘or 312J of FSMA 2000,
(0) section 345D of FSMA 2000 (whether as a result of section 345(2) or 345A(3) or section 249(1) of that Act), or’.—(Mr Hoban.)

Clause 80, as amended, ordered to stand part of the Bill.

Clauses 81 to 90 ordered to stand part of the Bill.

Schedule 17 agreed to.

Clauses 91 to 94 ordered to stand part of the Bill.

Schedule 18  - Further minor and consequential amendments

Amendments made: 112, inschedule 18, page284,line7, at end insert—
8A (1) Section 249 (disqualification of auditor for breach of trust scheme rules) is amended as follows.
(2) In subsection (1) for the words from “it may” to the end substitute “it may do one or more of the following—
(a) disqualify the auditor from being the auditor of any authorised unit trust scheme or authorised open-ended investment company;
(b) publish a statement to the effect that it appears to the FCA that the auditor has failed to comply with the duty;
(c) impose on the auditor a penalty, payable to the FCA, of such amount as the FCA considers appropriate.”
(3) For subsection (2) substitute—
(2) Sections 345B to 345E have effect in relation to the taking of action under subsection (1) as they have effect in relation to the taking of action under section 345(2).”
(4) For the heading substitute “Disciplinary measures”’.
Amendment 120, in schedule 18,page284,line43, at end insert—
( ) in the heading, for “Authority’s” substitute “FCA’s”.’.
Amendment 121,in schedule 18, page285,line18, leave out
‘“section 44 or 45 of a Part IV permission”’
and insert ‘paragraph (a)’.
Amendment 122,in schedule 18, page285,line26, leave out from ‘Part IV’ to end of line 27 and insert ‘substitute “Part 4A”’.
Amendment 113,in schedule 18, page285,line41, leave out from beginning to ‘subsection’ in line 2 on page 286 and insert—
‘In section 409 (Gibraltar), in’.—(Mr Hoban.)

Schedule 18, as amended, agreed to.

Schedule 19 agreed to.

Clauses 95 to 99 ordered to stand part of the Bill.

Schedule 20  - Transitional provisions

Amendment made: 114,in schedule 20, page311,line22, leave out paragraphs 6 and 7 and insert—
‘5A In relation to the first order under section 9K of the Bank of England Act 1998, subsection (2) of that section (which relates to consultation) does not apply.
5B (1) This paragraph applies where a provision of Part 5 or 6 of this Act, or an amendment of FSMA 2000 made by any provision of this Act, imposes on the FCA, the PRA or the Bank of England, in connection with the making or issuing of any rules or other instrument or document—
(a) a public consultation requirement, or
(b) a requirement (however expressed) to consult particular persons.
(2) The requirement may be satisfied—
(a) by things done (wholly or in part) before the commencement of the provision in question or the passing of this Act, and
(b) by things done by the Financial Services Authority or the Bank of England or by both of them.
(3) “Public consultation requirement” means a requirement (however expressed) to publish a draft of the instrument or other document with or without other material and to invite representations about it.
5C (1) The first order under section 22A of FSMA 2000 may, if it imposes on the PRA a public consultation requirement in relation to any statement of policy required by the order to be prepared by the PRA, provide that in relation to the first statement of policy the requirement may be satisfied—
(a) by things done (wholly or in part) before the commencement of the order or the passing of this Act, and
(b) by things done by the Financial Services Authority or the Bank of England or by both of them.
(2) “Public consultation requirement” has the same meaning as in paragraph 5B.’.—(Mr Hoban.)

Schedule 20, as amended, agreed to.

Schedule 21 agreed to.

Clauses 100 to 103 ordered to stand part of the Bill.

New Clause 1  - Debt management fees

‘The FCA shall bring forward recommendations within a year of the commencement of this Act to phase out the practice of directly charging consumers fees or charges for the provision of debt management plans.’.—(Chris Leslie.)

Brought up.

Question put, That the clause be added to the Bill.

The Committee divided: Ayes 8, Noes 10.

Question accordingly negatived.

New Clause 2  - Depositor preference in insolvency

‘The Treasury shall bring forward regulations to ensure FSCS insured deposits are moved above other unsecured creditors and above floating charge holders in the creditor hierarchy in the event of insolvency or any imposition of losses in resolution.’.—(Chris Leslie.)

Brought up.

Question put, That the clause be added to the Bill.

The Committee divided: Ayes 8, Noes 10.

Question accordingly negatived.

Mark Hoban: On a point of order, Mr Leigh. May I begin by saying how grateful I am to you and your colleagues Mr Howarth and Mr Gray for your expert guidance of the Committee’s deliberations on this important Bill? You have had the opportunity to demonstrate the many qualities that are needed of a Committee Chair, for example wisdom, objectivity, fairness and a keen understanding of procedure. Perhaps above all, you have been called upon to show great reserves of patience while the Committee has gone through the slow—sometimes, I would argue, unnecessarily slow—business of scrutinising the Bill. I thought we saw a head of steam build up late on Tuesday night, but that seems to have rather dissipated this morning. However, we have discussed all the key substantive clauses to give effect to the new regulatory system, and I would like to pay tribute to the work of all members of the Committee in that regard.
Inevitably, we have focused on some areas more than others. Perhaps most surprisingly, Government amendments 92, 93 and 122 received particularly searching scrutiny and revealed hitherto undreamt-of levels of interest by the hon. Member for Nottingham East in the use of Roman as opposed to Arabic numerals, and upper case versus lower case letters. I can only assume that that willingness to devote so much of the Committee’s time to those key issues means that he is broadly content with the rest of the Bill.
The debate has been wide ranging, including geographically. The hon. Members for Edinburgh East, for Kilmarnock and Loudoun—who had commendably brief remarks to make on the Bill—and for Foyle have championed the interests of Scotland and Northern Ireland respectively. We should not forget the hon. Member for Islwyn and his contributions.

Jesse Norman: Will my hon. Friend give way?

Mark Hoban: I am not giving way on a point of order.
The debate has ranged even further afield, touching on the vexed question of what we should call the inhabitants of Gibraltar—Gibraltans or Gibraltarians. I am advised that the latter is correct, although “people of Gibraltar” is also acceptable.
I am grateful to my hon. Friends for their loyal support, despite some tweakings by members of the Treasury Committee. Its reports were often commented upon by the hon. Member for Nottingham East. I am particularly grateful for the frequent attendance of my hon. Friend the Member for West Suffolk.
Our debates have been lively. The hon. Member for Leeds North East has been reprimanded for bringing in a forbidden substance, although porridge clearly does not have the same stimulating effects as other forbidden substances. In general, the Committee has been gastronomically-minded: we have fretted about legislative spaghetti; we have pondered the effectiveness of cupcakes as a lobbying tool—regardless of that, I am sure we all agree that cupcakes are a good thing—and the generosity of my hon. Friend the Whip in supplying plentiful supplies of coffee has ensured that my colleagues have remained awake and always been ready to spring into action during Divisions.
I am grateful to my officials for their work in providing support on the Bill, and for drafting the excellent explanatory notes that we have all relied on so carefully in Committee. I thank the Clerks, the Hansard reporters, the Committee staff and the police for their hard work in keeping things running. I particularly thank the Doorkeepers, who have been kept on their toes by the number of Divisions in Committee.

Christopher Leslie: Further to that point of order, Mr Leigh. First, I record my disappointment that we have run out of time in scrutinising—[ Interruption. ] I am sorry that hon. Members seem so happy to be free of the strictures of being in Committee. To be serious, more than 20 clauses have not been scrutinised. Some 35 sittings were dedicated to the then Financial Services and Markets Bill, but the Government’s programme order gave this Bill only 16 sittings. At the outset, we thought we could deal with the substance of the Bill during that time, but it quickly transpired that that was not possible. I hope that the other place takes notice of that, because several clauses and schedules have gone through undebated, and the serious detail in them has not been discussed.
I pay tribute to you, Mr Leigh, and to the other hon. Members who have chaired the Committee, sometimes with great patience and fortitude. That has been much appreciated. I also pay tribute to the Clerks of the House, who have helped to frame the technical language of the considerable number of amendments that we tabled. I pay a personal tribute to my hon. Friends, who have been exceptionally patient throughout a long period. I am grateful for their contributions, and to my hon. Friend the Member for Foyle for the excellence he brought to the Committee. I pay tribute to the team in my office for their help. They are a small but perfectly formed team.
I also want to stretch my hand across the Room and thank the Minister. He has demonstrated a strong grasp of the legislation and has been able to answer questions diligently. That is, in no small part, also thanks to the excellent team of civil servants and officials who support him. In The Times the day before yesterday, I saw a pyramid of hierarchy within the Treasury. The Minister featured on the bottom rung of the pyramid, and the Government Whip was in the tier above the Minister in closer proximity to the Chancellor.

Greg Hands: The hon. Gentleman had the newspaper upside down.

Christopher Leslie: The hon. Gentleman is too modest. I must pay tribute to the Whips and the usual channels who tried their best to make sure that we made smooth progress. Even further up that hierarchy was the hon. Member for West Suffolk. He has been an omnipresent force in Committee. He has been silent, yet able to pull the strings of those who are in formal positions of power. He managed to keep a beady eye on their behaviour. No doubt he will report back to the Chancellor on the sad progress that we have made on the Bill. It is a shame that we have not been able to finish it, but I pay tribute to all those involved.

Edward Leigh: On behalf of myself and my fellow Chairmen, I thank you, Mr Leslie, and you, Mr Hoban, for behaving yourselves so well. Mr Howarth has enjoyed listening to you all so much that he has now fled to Israel, leaving me to take this enjoyable part of the Bill to its final conclusion. I thank the Clerk for looking after us Chairmen so expertly and making sure that we did not get the procedure wrong. I also thank the Doorkeepers. Thank you all for being so well behaved. The high point was when Mr Leslie broke into Latin; he did it very well. We have all enjoyed ourselves very much.
May I pay particular tribute to the two Front-Bench spokesmen? I know that reading out a Treasury brief may look easy, but it is remarkably hard. The Minister has really been on top of the job dealing with very difficult questions. If there are any representatives of the Labour Whips Office here, may I congratulate Mr Leslie? Speaking at such great length while remaining in order and not being tediously repetitious is not easy. He has never been tediously repetitious.
I shall miss you all very much.

Bill, as amended, to be reported.

Committee rose.